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New Chip Credit Cards Deadline Has Arrived

Stores, restaurants and hotels meet the deadline to have the "Chip and PIN" technology installed to work with the new, more secure credit cards. (Published Thursday, Oct. 1, 2015)

Whether you’re buying a latte or a new pair of jeans, the new credit cards with the square metallic chips on the front are meant to better protect you from fraud. Here’s what you should know about the chip technology.

What is that shiny square?

Chip technology is intended to cut down on credit and debit card fraud by making working fake cards more difficult to make, according to Will Wade-Gery, assistant director of card and payments markets in the Research, Markets and Regulations Division of the federal Consumer Financial Protection Bureau. The chips provide additional information beyond what is provided by the magnetic strips that allows a merchant to authorize a transaction: a cryptogram that changes each time the card is used.

The technology, which has been in use for years elsewhere, is often called E.M.V. for Europay, MasterCard and Visa.

"The change-over is important because over time it should reduce counterfeit cards and some forms of fraud," said the bureau's Gail Hillebrand, assistant director for consumer education and engagement. "It won't eliminate all the fraud but it will make it harder for fraudsters who acquire your card information to create a physical counterfeit card. And that's a useful step forward."

A new report from CreditCards.com found that more than six in 10 U.S. credit-card holders still do not have a card with a chip.

Because the credit card industry set a deadline. The change is not legally required, but beginning in October merchants without the new equipment could become liable for fraudulent transactions according to their agreements with credit card companies.

"The number one thing you should know as a consumer is your responsibility has not changed," Hillebrand said.

"Consumers will still have to take active steps to identify and speak up when there is fraud," Hillebrand said. "No one change is going to stamp out all the fraud including this one. So it's still important to read your statements, which is actually harder to do online because we forget. It's still important to report every wrong charge on your debit or your credit card whether it's large or small."

Check your transactions regularly to make sure there are no unauthorized ones on your account. Sometimes thieves will charge a small amount to your account to see if it is processed before adding more transactions. Report suspicious charges or debits immediately. Cancel your card if you find fraudulent charges and consider changing your PIN.

Online and over the phone shopping will not be safer with chip technology.

Are merchants prepared?

Maybe not everyone. Holly Wade, director of the Research Foundation at the National Federation of Independent Businesses, said the organization was concerned that many small business owners are confused about the new cards and card terminals.